Is anyone concerned about the affects of the US economic collapse, at the local level? How about the individual level (this means you)?

Let me throw a bone out there and mention that credit unions are a likely safe haven, going forward — find a local one at http://www.findacreditunion.com/search.cfm . Chances are good that many reading this post will soon be moving money to prevent savings from being frozen or lost due to a bank collapse.

The majority of credit unions were formed around main industries. Over the years, they expanded to accept family members and others. About 10 years ago, Congress changed things and liberalized the membership rules. Credit unions were allowed to move to community charters, which allowed them to accept anyone who lived in a pre-defined geographic territory.

The National Credit Union Share Insurance Fund insures deposits at least up to $100,000, just like the FDIC insures deposits in banks. Consumers can get more protection if they structure their accounts properly. (The federal bailout bill approved by Congress last week raises that insurance to $250,000 per account.)

If there's any interest, I'll write a bit about what you can do to protect your US dollar-based assets from the dilution (inflation) of our currency (the end result of corporate bailouts, and the coming $100 trillion debt associated with social security and Medicare). Keep in mind your tax-deferred 401(k) and IRA savings are stuck in US dollars for eternity, unless you cash them out and take a tax hit. Post your questions here.

The recommended way to determine if your bank might be in danger of failing is to look at the "Texas ratio" for each bank. You can find the % number Texas ratio at —http://nuscho.com/Default.aspx

From Wikipedia (which allows text copying, so this is not a rights infringement):

//The Texas ratio is a measure of a bank's credit troubles. Developed by Gerard Cassidy and others at RBC Capital Markets, it is calculated by dividing the value of the lender's non-performing loans by the sum of its tangible equity capital and loan loss reserves.

In analyzing Texas banks during the early 1980s recession, Cassidy noted that banks tended to fail when this ratio reached 1:1, or 100%. He noted a similar pattern among New England banks during the recession of the early 1990s.//

This is like investing in a CD that’s denominated in non-US currency. You choose the currency. This could be a useful hedge given a rapid US dollar decline, since the corporate bailouts are beyond $8 trillion now and are expected to continue to rise, further diluting the US dollar. Prior to the bailouts, US debt was at $11 trillion. Not counting Medicare and Social Security shortfalls in the next several years which are expected to be in the neighborhood of $50+ trillion.

There are a scattered few other banks in the US that offer similar products for US citizens, but this is the least expensive and the most convenient product I have found. And there is a CATHAY branch in the International District.

Also, if your company has a Roth 401(k) option I recommend you check it out (same goes for simply opening or contributing to a Roth IRA), as state and federal tax rates are expected to be much higher (due to high levels of US debt) by the time many people reading this retire. Amounts you withdraw from your IRA are fully or partially taxable in the year you withdraw them after 59 1/2 years of age. Withdrawals made prior to age 59 1/2 may be subject to a 10% additional tax.

Also, Congress is discussing (just discussing at this point — don't be alarmed unnecessarily please) creating something called a GRA (Guaranteed Retirement Account). This might involve the government taking 401(k) and IRA assets more than a certain amount ($250K maybe?) and withholding it by putting it into a pool of money that gives less fortunate retirees access to this money. The likelihood of this happening is remote, but Congress is discussing it or some form of it right now. This is because the average baby boomer will not have enough to retire on, sparking a crisis. It will be even harder for later generations to retire at current standards of living because health care, cost of living and taxes will be continually rising. More info at —

So if you like the idea of a Roth, realize that you can't use your earnings on that money before 59 1/2 without penalties. Withdrawing Roth contributions can be done at any time without penalties. And if the GRAs or something like it comes into being, if you have a substantial amount in your retirement accounts, you may want to take an early withdrawal and penalty on some of it to avoid government confiscation (pray this doesn't happen).

The new Debt-Free Index CD is comprised of equal parts Singapore dollar, Japanese yen, Swiss franc, Australian dollar and Brazilian real. Why these currencies? All 5 economies have a strong balance of payments-a factor that could aid performance against the U.S. dollar.

Of the 5 economies, only Australia has a trade deficit-and the gap appears to be narrowing. Concerned about investing in a weak U.S. dollar? Consider this new Index CD, it is available in 3- and 6-month terms with a $20,000 minimum deposit. Apply today at http://www.everbank.com/001CurrencyCDIndex.aspx.

This CD is FDIC insured against bank insolvency, but please keep in mind that you could lose principal as a result of currency fluctuation (and also be aware that the federal government may change bank FDIC standards on a whim, which offers little guarantee that any bank can insure 100% of anything you put into it).

Lately, I'm being bombarded with one question from investors: Where should I invest my money? I've touched on this already, here. I haven't mentioned inverse ETFs (which make money as the market drops) — I was telling people about these two years ago, right after I warned many people locally about the coming real estate crash. Many of these inverse ETFs made very nice profits during that time — http://www.bloomberg.com/apps/data?pid=invest_mutualfunds (if you aren't sure what an inverse ETF is, Google it).

The market is expected to drop more in 2009. Some estimate at least another 25% drop, with another 20% drop in home values. In 2010, probably more of the same.

This affects everything in the community — budgets, volunteerism, grants, crime, businesses, you name it. I share this info in hopes that some of you will actually research it and use it, so that not everyone locally is in the same situation two years from now. I hate to see people needlessly struggle through "hard times" because they believe they have no choice in the matter.

Kind of like how the news media continually tells us trillions of dollars in retirement money have "vanished." This money did not vanish — someone else was on the other side of that trade (as always), and that person has your money. That would be big Wall Street investment firms, in this case, for the most part. Why not be on the other side of the losing trade, too?